Dec. 2 (Bloomberg) -- European export growth slowed and
investment stagnated in the third quarter, countering a gain in
consumer demand and curbing an economic expansion.

Exports from the 16-member euro region rose 1.9 percent
from the second quarter, when they increased 4.3 percent, the
European Union’s statistics office in Luxembourg said today.
Investment stalled after rising 1.7 percent in the second
quarter, while spending growth by consumers accelerated to 0.3
percent from 0.2 percent. Gross-domestic-product growth eased to
0.4 percent from 1 percent.

Europe’s economic expansion is cooling as authorities
struggle to halt a sovereign-debt crisis, which forced the Irish
government to seek external help last month. The European
Central Bank, which will probably keep its benchmark interest
rate unchanged at a record low today, is under pressure to aid
governments’ efforts to stem the turmoil.

There’s some “moderate encouragement” that the recovery
is becoming a “touch more broad-based,” said Jonathan Loynes,
chief European economist at Capital Economics Ltd. in London.
“While the economy appears to be weathering the sovereign debt
crisis reasonably well for now, there are still good reasons to
be concerned about the outlook over the coming quarters.”

The euro was little changed after the report, trading at
$1.3184 at 12:05 p.m. in Frankfurt, from $1.3139 yesterday.

Divergence

Government-spending growth accelerated to 0.4 percent in
the third quarter from 0.1 percent, today’s report showed.
Imports increased 1.7 percent, slowing from a 4.2 percent pace.
There was no contribution to GDP from inventories after they
added 0.4 percentage points in the previous three months.

From a year earlier, euro-area GDP rose 1.9 percent, after
increasing a revised 2 percent in the second quarter. The
statistics office had previously reported an annual GDP gain of
1.9 percent in the second quarter. A separate report showed
producer-price inflation accelerated to 4.4 percent in October
from 4.3 percent. In the month, prices rose 0.4 percent.

The GDP data adds to signs of increasing divergence within
the euro area. German GDP increased 0.7 percent from the second
quarter, when it surged a record 2.3 percent, while growth in
France slowed to 0.4 percent from 0.7 percent. Italy’s expansion
eased to 0.2 percent from 0.5 percent.

In Spain, the economy stalled in the third quarter and
Greece’s economy contracted 1.1 percent. The statistics office
didn’t publish data for Ireland. Reports yesterday showed
manufacturing strengthened in Germany and France in November,
while it stagnated in Spain and shrank in Greece.

Turmoil

Ireland’s 85 billion-euro ($112 billion) aid package has
failed to quell market turmoil as investors shift attention to
other nations. ECB President Jean-Claude Trichet, who holds a
press conference at 2:30 p.m. in Frankfurt, said on Nov. 30 that
observers tend to “underestimate the determination of
governments” to restore euro-region stability.

The ECB may be “forced to increase its programs
substantially” to help ease the debt crisis, said Juergen
Michels, chief euro-region economist at Citigroup Inc. in
London. “The existing measures are unlikely to be sufficient to
solve the problems in the periphery,” he said.

The ECB, which has purchased government bonds to fight the
crisis and provides banks with unlimited liquidity into early
2011, will also publish new economic forecasts for this year and
next after its meeting today.

Concern about governments’ ability to push down mounting
debts sparked an 8 percent drop by the euro against the dollar
this year, helping to boost exports. Porsche SE, the maker of
the 911 sports car, said on Nov. 24 that operating profit surged
more than sevenfold. L’Oreal SA, the world’s largest cosmetics
maker, said on Oct. 21 that third-quarter sales jumped 15
percent, beating analyst estimates, partly on a weaker euro.

“The euro will be defended at all costs,” said Jan Poser,
chief economist at Bank Sarasin in Zurich. “Paradoxically, the
weak euro will not lead to the failure of euroland, but will
raise growth in core countries, which will help to pull the
European periphery out of its debt hole.”